Budget supermarket Asda faced backlash this week when it was revealed to be charging a £99 "pre-authorisation charge" to petrol customers who paid at the pump rather than at the kiosk, under new rules introduced last year by Visa and Mastercard.
In order that customers don’t fill up with more fuel than they can afford, the fee, equivalent to the cost of a full tank of petrol, was being trialed by Asda at three stores. However, the negative reaction from some consumers, who said they did not receive their money back for several days, led it to suspend the scheme on Wednesday.
An Asda spokesman said: "Whilst we have received very few complaints about this process, until we can be given assurance that all banks are able to comply with the Visa and MasterCard rule change, we cannot continue to implement this change and risk harming our customers’ trust in us."
What is a pre-authorisation charge?
A pre-authorisation charge is temporary hold of a specific amount on someone’s available credit or debit card balance. The charge is shown as deducted from the overall balance, but the money never leaves the account.
The amount is essentially "ring-fenced" by the bank or card provider as a security guarantee for payment, and is never taken or held by the supermarket or petrol station.
Once the payment has cleared the charge will reappear on the customer’s balance. This can take as little as 20 minutes or as long as two to three days, which is why Asda customers reacted badly to the new scheme.
Previously rules stated a pre-authorisation charge of £1 should be taken at petrol pumps, but Visa and Mastercard increased the minimum charge for all retailers last year.
A spokesman at Mastercard said: "Last year a change in industry rules meant that petrol stations with automated fuel pumps were required to pre-authorise a value equivalent to a full tank of fuel, so that customers didn’t fill up with more fuel than they could afford. This is designed to protect them, and the petrol station."
How can I complain if the refund of money is delayed?
Visa said that it was "working closely" with card issuing banks to ensure that consumers do not experience delays in the adjustment of the initially-held amount. "However if consumers notice that initial amounts held against their accounts are not adjusted immediately, they should raise this with their card issuing bank in the first instance," a spokesman said.
Are there other instances I might be charged a pre-authorisation fee?
Pre-authorisation charges are more commonly used when checking into hotels, where the clerk may ask to take the details of your card to pay for any charges you might incur during your stay, such as for food and drink from a minibar, or a bar tab.
This pre-authorisation is likely to happen even if you’ve paid for the full price of the room in advance.
Hotels vary what they charge, but it can be anything from £50 a night to £100. This means guests staying at a hotel for two weeks could see their bank balance temporarily drop by nearly £1,500.
If you hire a car then the rental firm may also initiate a pre-authorisation charge as cover for any potential damage, late return or empty petrol tank, while some supermarkets also use pre-authorisation charges when a customer buys their groceries online, as often the final amount is unknown due to, for example, the weight of some products that determine price, so an estimated amount is pre-authorised.
What happens if I don’t have enough money in my account?
A Mastercard spokesman said: "If customers don’t have the required funds in their bank account, a further step is available to petrol stations which allows them to check what available funds a customer has, enabling a lower value of fuel to be dispensed.
"While some customers may see a request for a higher amount than the fuel they bought – perhaps on their mobile banking app – these funds are not taken from their account. Only the value of the petrol dispensed is withdrawn."
However, the spokesman later confirmed that motorists at a petrol pump who don’t have £99 in their account may have the transaction declined and will need to pay at the kiosk rather than at the pump.
The same issue will occur if you don’t have enough money to cover a pre-authorisation payment for a hire car or hotel stay, so an alternative payment method will likely be requested.
If the credit or debit card balance isn’t high enough to cover the pre-authorisation fee and the card holder goes into their overdraft, then they could face charges as a result of going overdrawn.
Will all UK supermarket petrol stations introduce the charge?
Asda was first to introduce the £99 charge last month at three of its stores. It was understood that Tesco, Sainsbury’s and Morrisons had considered rolling out the change later in the year, but it’s likely that the backlash against Asda will mean they hold off, for now.